Are supermarkets going in the right direction in terms of producing the kind of profitable sales they should, and, if not, what should be done about it?
The answer to the first question is that, by several measures, supermarkets are not moving in the right direction.
Consider these numbers: The median sales increase of all stores was 1.5% in 1992 and 0.1% in 1996 as measured in real dollars; the median average sales ticket went from $13.08 to $12.44 in the same time period; median weekly sales per square foot went from $7.09 to $6.34; median sales per labor hour went from $78.95 to $72.45, and -- notice this -- median average total-store size went from 32,400 square feet to 38,600 square feet. All these numbers were drawn from the most recent edition of the Food Marketing Institute's "Speaks" report.
These numbers are a little gloomy, but it should be pointed out that industry net profit levels rose from 0.77% to 1.20% of sales during the time period we're considering, to a record high. This seems to be reflective of efficiency improvements.
Maybe what's happening is that store size is increasing at a pace that's overtaking innovative uses for added space. So, by many measures, supermarkets are throwing off fewer dollars than they should.
What to do? This issue of SN alone contains several news articles that point out directions in which supermarket operators are going in a bid to increase sales.
Generally, all these solutions move toward establishing specialty spaces within the store. These specialty spaces seem to have in common the goal of making the supermarket a more attractive shopping destination. As you'll see, none of these ideas are brand new, but all these, and others that frequently appear in these pages, are worthy of increased consideration when it comes to the quest for more productive uses of larger selling spaces. Here are three quick examples:
A ShopRite operator in New Jersey rolled out a PetRite department in the store's front alcove from which a range of pet food and supplies is merchandised. Separating the section from the balance of the store is intended to highlight the broad product selection available. (Page 23.)
Kash n' Karry in Florida is expanding its Celebration Station greeting card and partyware department. The idea is to bring into a single department adjacent boutiques from which products under several themes can be merchandised. Themes include wedding, baby and so on. (Page 27.)
Draeger's Supermarkets in California has taken a big step away from conventional thinking with a newly opened store. It's on two floors, one of which offers an upscale grocery mix, the other of which consists of a restaurant, a banquet room plus the offer of two product lines: housewares and books. (Page 15.)
Look for more and more of these specialty approaches as retailing innovators discover better ways to make their stores shopping destinations.